Being A Public Company – A Good Thing?

Before I launch into this subject I think I had better make one thing very clear. What I write about this and all the other subjects past, present and future is my view and not necessarily those of any company I have worked for. I am sure they are very capable of giving their own opinion if asked! I am in a position where, within reason, I can say what I want now that I have retired.
I learned two truisms about PLC status very early on. Firstly, it earns a few people a lot of money and secondly, all the rules of the game change to dramatic effect. There are so many people there to take their cut and they do not go away. In fact not only do they remain but others join them with the sole intent of using the company as a vehicle to increase their cash flow and make money. But that is not the bad part, after all everyone from the filing clerk to chairman wants security and income. The bad part is that you are both directed and judged by these folk and many of them do not have a clue about the business from a commercial perspective. To them it is trends and numbers with very little room for entrepreneurism, flexibility and market forces.

Allow me to try and explain in perhaps a rather simplistic way. Once you have gone through all the posturing, audits, presentations and gained the necessary financial house and investor commitment you finally become a public company valued at your given share price times the number of shares released. Now all you have to do is deliver everything you said in your presentations resulting in the expected revenue, cash flow and profit. Simple.

But it is not simple even if you achieve all the above. Why? Because you not only have to deliver it but you have to deliver in the same shape as originally presented i.e. by doing it exactly as you said you would. Why you may ask? Surely the end result is the important bit especially as circumstance change so much in the commercial world what with new technologies, prices, competitors etc. No, what you have to prove is that you knew what you were doing in the past so they can trust you to do it in the future regardless of change. You see as soon as the results are published they become history and it is the next set of results they are looking to and hey, if you got "lucky" this time what is to say you will not be so fortunate next year?

It reaches a point that you have to invest huge funds and resources managing a bunch of institutions and investors that basically do not trust your opinion against there’s even though they do not understand the industry you are in. Very often the people you have to convince are young analysts fresh out of university who focus almost entirely on past statistics, economic forecasts and news journals. Woe betide you if you do not convince these folk as it is them, rather than your customers who call the shots and the word loyalty or trust are not in their vocabulary!

I guess if I was invested megabucks in an organisation I too would want to go through it with a fine-tooth comb but surely there must be a less expensive and less time consuming way than this?
This post was republished with permission from the blog of former managing director of HRG UK Mike Platt.